Stock or Asset Purchase Agreement
An important stage in the mergers and acquisition process is developing, planning and executing the stock or asset purchase agreement. The M&A transactions can be structured in various ways, but the it is important not to create a complex structure that cannot be understood by any of the parties. The goal when developing the acquisitions strategy is to create a simple and straightforward structure that reflects the goals and objectives of both Buyer and Seller.
Almost all structures, even the most complex, are at their roots either mergers or acquisitions, including the purchase or consolidation of either stock or assets. Today, most of the mergers and acquisitions of private companies are structured as a share acquisition rather than mergers or asset purchase. However, the most fundamental issue in the M&A deal structure whether the transaction is structured as an asset or stock purchase. There are advantages and disadvantages surrounding the stock or asset purchase and the facts and circumstances of each case should be considered before determining the ultimate form. Generally, most business Sellers prefer to sell their stock, yet most Buyers prefer to purchase the assets of a company rather than the stock.
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